Indian Economy Opportunities Unlimited Indian Economy Opportunities Unlimited

2 India: Fastest Growing Free Market Democracy

3 India: Among the Top-15 Countries in terms of GDP at constant prices The Indian economy has witnessed an unprecedented growth…. Booming Indian services and industry sector are providing the required impetus to the economic growth The sound performance of each industry segment is leading to the overall robust performance of the Indian economy Indian economy is the 4 th largest in terms of PPP – USD 4.1 trillion in 2006 India’s GDP witnessed high growth and was the second fastest growing GDP after China Growth in sectors ( ): Industry: 10.9% Services: 11% Agriculture: 2.7% Growth in sectors ( ): Industry: 10.9% Services: 11% Agriculture: 2.7% Fastest GDP growth of 9.4 percent in , since last 18 years Contribution of Services - increased from 49 percent to 55 percent 4% 8.5% 7.5% 8.4% 9.4%

4 India: Robust Economic Platform India’s enhanced economic performance has been the major contributor towards increased Forex reserves Steadily increasing Forex reserves offer adequate security against any possible currency crisis or monetary instability Falling Dollar inflates the India’s external debt Increased confidence of investors in Indian companies have led to a surge in cross border borrowing by the corporate houses Forex reserves witnessed an increase of 200 percent for the period …at present level of Forex reserves, the country has adequate cover for 12 months of imports India’s Forex reserves are in excess of external debt… …the decreasing external debt to GDP ratio indicates that India has a sound economic platform

5 India: Surging Exports Petroleum products are the major contributors towards India’s growing imports Quality and cost advantage are the two important parameters leveraged by the Indian producers to increasingly market their products and services Services sector has been a major contributor to increased exports from India Imports of products by India mainly includes petroleum products and minerals Indian companies have chalked out extensive plans to increase their presence abroad Acceptance of Indian products along with the cost advantage has provided an edge to Indian companies

6 India: Attractive Investment Destination India is ranked second in AT Kearney FDI confidence index Telecom and Electronics topped the list of inward FDI FDI inflow for the period witnessed a growth of 180 percent over the same period last year Mauritius has been the largest contributor towards FDI into India….. Return on the Investments in India (2006 Q1) MarketPE RatioP/B RatioRoE (%) India China Indonesia NA Korea Malaysia Taiwan Thailand EM Asia Latin America EM Europe With improved performance on PE ratio and ROE, Indian markets have attracted large investments 180 percent Increase

7 India: Vibrant Capital Market India is among the major destinations across the globe for inflow of US Dollar i.e. FIIs Sensex risen 15 times in the period Sensex – The Bombay stock exchange index has risen 15 times from 1990s to reach 15,000 mark in July 2007 FIIs augmented support by infusing large investments in Indian stock market Exorbitant industry performance Increased local investors’ confidence Emergence of industry and confidence of local investors along with the FIIs has led to increased movement of sensex 7/9/2007 Crossed 15,000 mark Crossed 14,000 mark Crossed 10,000 mark Crossed 5,000 mark 12/30/1999 2/7/2006 1/12/2007

8 India: Vibrant Economy Driving M&A Activities SECTOR USD (Mn) SECTOR USD (Mn) Automotive518Manufacturing933 Banking and Financial1,375Media630 Chemicals and Plastics 1,133Oil & Gas384 Electrical and Electronics 896Pharma & biotech 2,520 Energy1,484Telecom2,198 FMCG, Food and Beverages 1,327Others4,006 IT and ITES2,903Total20,305 Growth Drivers:  Globalisation of competition  Concentration of companies to achieve economies of scale  Lower interest rates and vibrant global markets  Cash Reserves with Corporates …Contribution of private equity deals to total number of deals have increased from nearly 9 percent in 2004 to 28 percent in 2006 In 2006, there were a total of 480 M&A deals and 302 private equity deals… … Average deal size close to USD 36 million… Trends:  Ratio of the Size of acquisition to the size of acquirer has grown from 10 percent in 2004 to 25 percent in  Cross-border deals are growing faster than domestic deals  Private Equity (PE) houses have funded projects as well as made a few acquisitions in India

9 Major M&A Deals Undertaken Abroad by India Inc. USD 12.1 billion Tata Steel buys Corus Plc USD 6 billion Hindalco acquired Novelis Inc. USD 1.58 billion Essar Steel acquired Algoma Steel USD 730 million Videocon Industries acquired Daewoo Electronics Corporation Limited USD 1.6 billion Suzlon Energy Ltd. acquires REpower

10 Major M&A and Investments Announcements in India USD 11 billion Vodafone buys Hutch USD 0.98 billion Aditya Birla Group increased its stake in Idea Cellular by acquiring percent stake USD 1 billion Plans investment in private equity, real estate, and private wealth management USD 1.7 billion Plans to spend on its development operations in India over the next four years USD billion Renault, Nissan and Mahindra & Mahindra has initiated a Greenfield automobile plant project in Chennai. Mylan Laboratories acquired a majority stake in Matrix Laboratories USD 0.74 billion

11 India: Pacing Ahead to Emerge as a Major Economy in the World 2007 Global Retail Development Index (GRDI) India has been ranked superior to other major countries by many prominent surveys… AT Kearney placed India among the top three in its FDI confidence index… … the retail market along with the services sector has been attracting the interest of major players India is expected to outperform its rivals in the BRIC, in terms of GDP growth rates, from 2015 onwards…

12 India: Astounding Demographics (E) Rich (Above 115,000) High Income (57,000 – 115,000) Consuming class (23,000 – 57,000) Working class (10,200 – 23,000) Needy (Below 10,200) Annual Household Income (in USD) * In PPP terms Population (million) Increasing per capita income coupled with an emerging middle class has provided the necessary impetus to consumerism in India Growth in the higher income categories of India’s population has created an affluent section of society, which has significant level of purchasing power Increasing per capita income and large population moving into middle class has led to high level of consumerism in India DEMOGRAPHIC TRANSFORMATION OF INDIA

13 Countries worldwide are anticipating a shortage of working population in the future. India is expected to emerge as a clear winner, and by 2050, it will have the largest working age population. India: Increasing Working Population Stock Position 2005 South East Asia 362 Southern Asia 132 India 691 Africa 500 China 934 Latin America 359 USA 200 Europe 497 Japan 85 World 4,168 In Million Addition to Working Age Population by 2010 Growth in Global Working Age Population (15-64)

14  GDP – USD 590 billion  GDP growth rate – 9 %  Services contribution – 54 %  FDI limit not 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.  Balance of Trade – USD (-)46.2 billion  Investment goal – USD 250 billion 2006  GDP – USD 750 billion  GDP growth rate – 9.5%  Services contribution – 60 %  FDI limit is expected to be close to 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.  Balance of Trade – Should increase with surging exports as compared with imports  Investment goal – USD 305 billion 2008  GDP – USD 900 billion  GDP growth rate – 9%  Services contribution – %  FDI limit is expected to be 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.  Balance of Trade – Should be positive with increased level of exports as compared with imports  Investment goal – USD 370 billion 2010 Growth Expected in India To sustain the GDP growth of more than 8 percent, India requires an investment of USD 1.5 trillion in the next five years

15 India has among the highest returns on foreign investment. - Dan Scheinman, Cisco System Inc. as told to Business Week, August 2005 “We came to India for the costs, stayed for the quality and are now investing for innovation”. A T Kearney FDI Confidence Index 2005 India is among the three most attractive FDI destinations in the world. Jack Welch General Electric “India is a developed country as far as intellectual capital is concerned”. US Department of Commerce By 2032, India will be among the three largest economies in the world. BRIC Report, Goldman Sachs Why India? – Quote Unquote Travyn Rhall, ACNielsen “The Indian market has two core advantages - an increasing presence of multinationals and an upswing in the IT exports”. Craig Barrett Intel Corporation “India has evolved into one of the world's leading technology centers“.

16 DISCLAIMER This presentation has been prepared jointly by the India Brand Equity Foundation (“IBEF”) and Evalueserve.com Pvt. Ltd., EVALUESERVE (“Authors”). All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of the Author’s and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. The Author and IBEF neither recommend or endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed in this presentation. Neither the Author nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.